Reported GAAP net profit of $302,000, or $0.03 per share, compared
with net income of $219,000, or $0.02 per share, in the previous year third
quarter;

Results include $575,000, or $0.05 per share, in severance costs
associated with the resignations of previous Chairman Phillip Sassower and
previous CEO Mark Holleran, and $91,000, or $0.01 per share, representing a one-time
property tax payment related to assets acquired from Motion Computing in 2015;

Generated adjusted EBITDA, before one-time charges, of $1.7 million,
Xplore’s sixth consecutive quarter of positive adjusted EBITDA, compared with adjusted
EBITDA of positive $822,000 in the prior year third quarter;

Won sizeable orders across a number of targeted vertical markets,
including telecommunications, automotive manufacturing, military, government
agencies, consumer service and car rentals;

Secured orders with two leading US pharmaceutical companies to
refresh existing Xplore tablets with the Xplore XC6 Clean Room version,
designed to be easily disinfected on a regular basis;

Fulfilled orders from large fast food company using Xplore rugged
tablets as part of its line-busting digital initiative;

Grew international sales to 34% of revenue as a result of sales
efforts and improving distributor and reseller relationships;

Appointed Tom Wilkinson as CEO;

Announced an expansion and extension of the company’s Bank of
America credit facility to $20 million; and

Launched the XBOOK line of Windows and Android mobile 2-in-1
convertible units, entering the $900 million rugged laptop market.

Chief Executive
Officer Tom Wilkinson stated: “We are pleased to report a four-fold increase in
adjusted EPS for the third quarter. We also see what we believe is a lessening
of seasonality between third and fourth quarter orders, resulting in a slight
3% decline in third quarter topline, but a better than seasonal fourth quarter
expectation. The third quarter reflected solid order flow from a wide range of
both new and existing customers, high backlog and an improved product mix, driving
one of our best profit quarters in the past two years. These trends have
continued into the fourth quarter, positioning Xplore for a strong finish to
the year.

“Fiscal third quarter sales included
deliveries to leading global customers across a number of targeted vertical
markets, including telecommunications, automotive manufacturing, military,
government agencies, consumer service and pharmaceutical manufacturing. Xplore
also secured orders from a global fast food company, the Veteran’s Administration
and a leading national car rental company, showcasing the incredible breadth of
the rugged mobility market we serve.

“Looking ahead,
we believe EPS growth will continue to exceed revenue growth as we further
expand our share in rugged tablets, including both existing platforms and
additional form factors. We are also excited about the recently announced XBOOK
launch, propelling Xplore solidly into the $900 million rugged laptop market
with a high performance, lower cost solution than our competition. These growing offerings will be developed on
average at a lower cost to our shareholders than prior products as we leverage
the existing rugged technology and historical ODM relationships. Additionally, we see demand for our
increasing product line within existing channel partners and customers. We are answering the existing demand in
rugged mobility.”

Fiscal 2018 Third Quarter Financial ResultsXplore reported
revenue of $23.9 million for the fiscal third quarter ended December 31, 2017, a
4.9% sequential increase from revenue of $22.8 million in the fiscal second quarter
of 2018 and a 2.6% decline from $24.5 million in the year-ago third quarter. Revenue
reflected increased demand for rugged tablets, increased international sales, fulfilment
of large multi-quarter customer contracts. Additionally, revenue reflected a
flattening of prior seasonal trends due to increased fulfillment of long-term
orders and diversification of the customer base.

Gross profit in
the third quarter was $7.6 million, or 31.9% of revenue, compared to $6.4
million, or 27.9% of revenue, in the preceding quarter and $6.7 million, or 28.1%
of revenue, in the prior year third quarter. The change in gross margin reflects
improved product mix.

Operating expenses
were $7.2 million for the fiscal third quarter, compared with $5.9 million in
the second quarter and $6.3 million in the prior year third quarter. Operating
expenses reflect continued lean operating practices plus additional sales and
marketing hires to drive further revenue growth. Expenses also included
$575,000 in severance costs associated with the resignations of Phillip
Sassower as Chairman and Mark Holleran as CEO, and $91,000 as a one-time
property tax settlement related to assets purchased from Motion Computing in
2015.

For the
quarter, Xplore reported net income of $302,000, or $0.03 per share, compared
to net income of $397,000, or $0.04 per share, in the prior quarter and net
income of $219,000, or $0.02 per share in the fiscal third quarter 2017. After
adjusting for one-time severance costs, Xplore reported net income of 968,000,
or $0.09 per share in the fiscal third quarter.

EBITDA adjusted
for non-cash compensation and historical integration costs was $1.7 million,
compared with $1.0 million in the preceding quarter and $822,000 in the fiscal third
quarter 2017. Xplore has now reported six consecutive quarters of positive
adjusted EBITDA and $3.6 million year-to-date. A reconciliation is provided in
the tables included in this release.

Cash Flow and Balance SheetNet cash used in operating activities was $6 million
for the quarter ended December 31, 2017. The change in net cash reflects increased
accounts receivable as revenue increased as well as added inventory to ensure
fulfillment of large customer orders and minimum order quantities on certain
legacy products. Net cash used by operating activities reflects a $4 million
increase in accounts receivable, to $23.2 million, and a $4.2 million increase
in inventory, to $26.7 million. At quarter end, cash was $18,000 and debt under
the company’s line of credit was $14.3 million.

“Our balance sheet is
operating very efficiently to fund both our sequential growth through fiscal
2018, as well as prepare Xplore for further anticipated growth in fiscal 2019,”
said Wilkinson. “Accounts receivable reflects continued strong order flow and
increasing revenue, compounded the timing of sales which has shifted to later
in each quarter, creating growing receivable balances. Inventory reflects certain purchases ahead of
customer orders as well as minimum order quantity requirements to ensure
availability of key platforms for existing customers, and to protect against
inventory shortages that we experienced in the prior year. We are growing our product line, and while we
expect to see inventory decreases in mid fiscal year 2019 due to shifting of
our manufacturing schedule, our new products will require additional inventory.
We expect to generate significant free cash flow once again as revenue stabilizes
at these new higher levels and we sell-down inventory over the coming quarters. Our newly expanded line of credit facility
with Bank of America supports our working capital needs without our having to
seek new equity capital for growth.”

OutlookFor fiscal 2018, Xplore raised its revenue outlook to the high end of
its range, approximately $85 million. Gross margin for the fiscal year is
expected to be between 28% and 30%. Operating expenses are expected to be
approximately $23-25 million, excluding the aforementioned one-time charges, reflecting
a full year of the company’s reduced operating expense profile. The company
anticipates GAAP profitability for the full year.

“We continue to execute
well, reporting solid sales in the December quarter and raising the revenue
outlook to the high end of our previous range,” said CEO Tom Wilkinson. “We are
seeing a better than seasonal fourth quarter with strong demand for Xplore
rugged tablets, high backlog due to longer term customer orders and improved
international execution. The entire team at Xplore is excited by our
transformation into a rugged mobility company, and we look forward to continued
execution on our operating goals.”

Conference CallThe
company will conduct a conference call and webcast to review the results on
Wednesday, February 7, 2018, at 4:30 p.m. ET. Interested parties in the United
States can access the call by dialing 844-854-4410; interested parties outside
the United States can access the call by dialing +1-412-858-4610. Callers
should dial in at least 5 minutes prior to the all start time. A live and
archived webcast will be available online in the investor relations section of
Xplore’s website at
www.xploretech.com. A replay of
the conference call will be available until February 21, 2018, by calling
877-344-7529 from the United States or +1-412-317-0088 from outside the United
States and entering conference ID number 10116738.

About Xplore Technologies
Xplore is The Rugged Tablet Authority™, exclusively manufacturing powerful, long-lasting, and customer-defined rugged tablet PCs since 1996. Today, Xplore offers the broadest portfolio of genuinely rugged tablets – and the most complete lineup of rugged tablet accessories – on Earth. Its mobility solutions are purpose-built for the energy, utilities, telecommunications, military and defense, manufacturing, distribution, public safety, healthcare, government, and field service sectors. The company’s award-winning military-grade computers are also among the most powerful and longest lasting in their class, built to withstand nearly any hazardous condition or environmental extreme for years without fail. Visit
www.xploretech.com for more information on how Xplore and its global channel partners engineer complete mobility solutions to meet specialized workflow demands. Follow us on Twitter, Facebook, LinkedIn, and YouTube.

Forward Looking Statements
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions are intended to identify forward-looking statements. Such statements reflect Xplore’s current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause actual results to differ materially from the statements made including those factors detailed from time to time in filings made by Xplore with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Xplore does not intend and does not assume any obligation to update these forward-looking statements.

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